Consider a bit of what Congress is trying to get through when you hear about the splendidness of 'bipartisanship' and how it is such a good thing for America. Really, those folks wanting 'across the aisle' agreement should be very wary of what they are asking for. Lets take a look at what Senators Richard Shelby (R-AL) and Christopher Dodd (D-CT) are cooking up there, Upon the Hill (Source: National Low Income Housing Coalition) (h/t: W.C. Varones at Polipundit):
WASHINGTON, DC - Responding to pressure from Ranking Member Senator Richard Shelby (R-AL), the Senate Banking, Housing, and Urban Affairs Committee appears to be on the verge of diverting funds designated for a housing trust fund for housing for the poorest Americans to pay for Committee Chairman Christopher Dodd’s (D-CT) new program to refinance homeowners facing foreclosure.
In his bill “The Federal Housing Finance Regulatory Reform Act of 2008,” Chairman Dodd proposes to allow the Federal Housing Administration to insure refinanced mortgages of homeowners who face foreclosure. The Congressional Budget Office estimates this new program creates a potential liability for the federal government of $1.7 billion.
Reports are that Senator Shelby will only agree to the new FHA program if it is paid for by non-taxpayer funds. Senator Dodd’s bill also creates a housing trust fund with resources from Fannie Mae and Freddie Mac to build or preserve rental housing for extremely low and very low income people. Senator Shelby wants those funds to be used to pay for the new FHA program instead.
All well and good, then, right? I mean if you are 'facing a foreclosure' because you made a bad deal on your mortgage, the federal government needs to bail you out. Right? We certainly need another part of government just to 'oversee' those unwise enough to take mortgages beyond their means, right? And if the poor have to be put at risk as they have little to spend on housing, why that is just fine and dandy! Yes, make sure the poor don't have the ability to *rent* while those who *bought* a home under dodgy finances get away scot-free. Good job! Steal from the poor and give to the rich...
Dick Armey and Steve Forbes would like you to give a jingle on this at angryrenter.com and you, as a non-renter, can also support them against the anti-Robin Hoods in the Emirate of Incumbistan.
Then there is the category of 'we want to pander the public's money so fast we forgot to do our work' end of it, as seen by Michelle Malkin looking at the over-riding of the Bush veto on the Agriculture bill. And stealing from her linked article to the AP on this, there is a feeling of da-daist unreality:
The House overwhelmingly rejected President Bush’s veto Wednesday of a $290 billion farm bill, but what should have been a stinging defeat for the president became an embarrassment for Democrats.
Only hours before the House’s 316-108 vote, Bush had vetoed the five-year measure, saying it was too expensive and gave too much money to wealthy farmers when farm incomes are high. The Senate then was expected to follow suit quickly.
Action stalled, however, after the discovery that Congress had omitted a 34-page section of the bill when lawmakers sent the massive measure to the White House.
Yes, the bipartisan pig trough made it to the President's desk, he vetoed it. Congress, intent on getting the pig trough filled, was set to pay farmers already getting very wealthy off of high food prices even more so that they could be wealthier. Plus extra incentives NOT to plant crops! But, the little, eensy-teensy problem is: they didn't send the entire bill to be signed! Missing 34 pages, Congress now is in the position of trying to pass an incomplete bill...
So the anti-Robin Hood bipartisan coalition shows up and in their hurry to get the taxpayers money to wealthy farm supporters they just forgot a part of the bill. The White House then kindly pointed out that Congress was going to be back at square one and this is how Speaker of the House Nancy Pelosi's (D-CA) office responds:
A spokesman for House Speaker Nancy Pelosi, D-Calif., shot back.
“Partisan sniping won’t solve this clerical error that even the White House failed to catch,” said Drew Hammill.
Clerical error? The White House is not in the business of catching 'clerical error's in bills sent to it by Congress. Nope, that is solely the job of Congress.
And people call Bush 'stupid'!
Now if anyone needs some help on oil prices and production capacity, lets step through some basics, so we can get to the latest bit of 'bipartisan' views on this. To help us out we can go back to 1999 and the testimony given to the US Senate Committee on Energy and Natural resources by Steve Layton, President and CEO of Equinox Oil Company, part of the Independent Petroleum Association of America:
Today’s hearing is intended to examine the current state of the petroleum industry. I must say at the outset that I have never seen the domestic petroleum industry facing a more complicated and potentially devastating set of problems than it now does. The industry has faced a low oil price crisis for the past year, but today’s problems are very different and far more threatening than the ones that began the problem.
A year ago, the price crisis was started by a combination of events – the collapse of Asian economies, a warmer than normal winter in the northern hemisphere, and ultimately a market share fight between Venezuela and Saudi Arabia. The events created a surplus of oil in the international market and prices fell. The production most at risk was marginal oil wells in the United States – wells that produce about 20 percent of America’s domestic production, an amount equivalent to our imports from Saudi Arabia. And, I might add the wells from which I make my living.
Now, we have experienced a year of low oil prices – historically low prices that threaten the very heart of U.S. oil production. Domestic oil production is divided into three general areas – the onshore lower 48 states, offshore, and Alaska. The onshore lower 48 states account for about 60 percent of total domestic oil production. The Energy Information Agency has released a recent report that over 60 percent of this onshore lower 48 production comes from independents, a percentage that has increased by ten percent over the past ten years. It reflects an irreversible trend. Major oil companies are leaving the onshore lower 48 states. Particularly since 1986 when the last price crisis occurred, major oil companies have turned their attention away from the onshore lower 48 states shutting in or selling off their production. They have concluded that these wells do not produce the volumes they need to meet the return on capital that they seek. Majors now operate in the United States primarily in the offshore and Alaska, but more and more they are seeking their new production overseas.
Remember, the year is 1999 under the Clinton Administration with Republicans in charge of the Senate. During a period of slack due to the 'Asian Tigers' going bust, plus a warm winter and a race to undermine each other by Venezuela and Saudi Arabia, gas was cheap, oil was cheap and no one was worrying about future supplies, except the Independents. And who was in the catbird's seat for oil prices? Here is a very interesting part and looks at who was undermining the US oil production capability via market manipulation:
In fact, we would submit that Iraq now controls world oil prices. We would submit that the current U.N. sanctions program has failed on two counts. First, it has failed in its primary mission to provide humanitarian aid to the Iraqi people. Second, it has handed Saddam Hussein the victory he lost in the Gulf War. He invaded Kuwait to control oil prices; now he does and he is penalizing his enemies.
How quickly people forget, no? Then he lays out exactly why the IPAA believes this:
First, world oil prices are essentially set by the last barrel sold. A year ago, Iraq exported about 700,000 barrels/day. In December 1998, it exported about 2.3 million barrels/day. By March it will have another 500,000 barrels/day of capacity on line. Iraq was the only OPEC country to boost its oil revenue in 1998. As other OPEC countries have reduced production to stabilize oil prices, Iraq has become the swing producer of world oil. The swing producer sets the price.
Second, Saddam’s objectives differ from other oil producers. He wanted higher oil prices when he invaded Kuwait – money he needed to build his military forces. Now, he can’t spend money to buy arms. But, he can – by keeping oil prices low – punish his enemies, first by reducing the income to Saudi Arabia, Kuwait, Iran, and others; second, by driving critical U.S. production to be shutdown and plugged forever.
Third, looking purely at demand and productive capacity, today’s surpluses should not drive prices to their historic depths. We estimate that worldwide production capacity currently exceeds demand by about 4 percent.
Now for those who haven't taken a look at oil wells: when you plug a well you can't 'unplug it' to start it back up again. The need for constant pressure and maintenance means that geophysics get to that hole pretty quickly and once its plugged you now have to drill a brand new hole if you want production again. Shutting down wells means that to re-open production requires new capital expenditure. The IPAA was hoping to get some way of keeping production going because of an artificially set low market back in the late 1990's. You didn't hear about that little tidbit recently, did you?
This economic warfare, aided and abetted by US environmental laws and prohibitions on production and drilling, would mean that once the artificially low market was gone, the US would be at a much lower production capacity and there would be economic hell to pay. For those in the 'no blood for oil' camp, this was 'oil profits for tyrants', which is not only no better, but a damned sight worse as it is aiding and abetting economic war under the thin veil of a cease fire. When the prices went low, many of the marginal companies suffered economic problems and the oil and gas industry underwent consolidation.
Then the US Senate Judiciary Committee, led by Sen. Arlen Specter (R-PA) was looking at this consolidation as it might lead to 'gouging' of consumers. The Cato Institute looked at this on 24 MAR 2006 which examined the cause of price fluctuations and two GAO reports that had been criticized:
Both studies are problematic. The GAO study has been criticized by the Federal Trade Commission for questionable methodological assumptions and practices. Oxedine and Ward concede that their study is incapable of distinguishing between mergers that create more efficient (albeit higher) prices and mergers that produce market power and correspondingly inefficient prices.
Regardless, even if the studies were methodologically flawless, the effect on consumers (I cent a gallon) is trivial. How then to explain the gibberish on display at the Senate hearing last week?
Only two conclusions are possible. First, the senators on the committee might be unfamiliar with the economic literature pertaining to oil markets and the insights it provides. But many experts have made similar arguments over the last 30years, and the congressional idiocy does not dissipate with time.
This suggests another conclusion: Committee members don't care about economic facts or logic. All they care about is scoring points with swing voters who have a deep-seated religious belief that price increases at the pump are always and forever manifestations of some corporate conspiracy. Pandering to the lowest common intellectual denominator is the name of the political game.
We're not sure which is worse.
Remember, now, this is Republicans complaining about high gasoline prices and not understanding the market. Now, as many of those exact, same Senators are still around as Elder Emirs in Incumbistan, they were also present at the ones on 21 MAY 2008 as seen by John Hinderaker at Powerline:
The last theme that was sounded repeatedly was Congress's responsibility for the fact that American companies have access to so little petroleum. Shell's John Hofmeister explained, eloquently:While all oil-importing nations buy oil at global prices, some, notably India and China, subsidize the cost of oil products to their nation's consumers, feeding the demand for more oil despite record prices. They do this to speed economic growth and to ensure a competitive advantage relative to other nations.
Meanwhile, in the United States, access to our own oil and gas resources has been limited for the last 30 years, prohibiting companies such as Shell from exploring and developing resources for the benefit of the American people.
Senator Sessions, I agree, it is not a free market.
According to the Department of the Interior, 62 percent of all on-shore federal lands are off limits to oil and gas developments, with restrictions applying to 92 percent of all federal lands. We have an outer continental shelf moratorium on the Atlantic Ocean, an outer continental shelf moratorium on the Pacific Ocean, an outer continental shelf moratorium on the eastern Gulf of Mexico, congressional bans on on-shore oil and gas activities in specific areas of the Rockies and Alaska, and even a congressional ban on doing an analysis of the resource potential for oil and gas in the Atlantic, Pacific and eastern Gulf of Mexico.
The Argonne National Laboratory did a report in 2004 that identified 40 specific federal policy areas that halt, limit, delay or restrict natural gas projects. I urge you to review it. It is a long list. If I may, I offer it today if you would like to include it in the record.
When many of these policies were implemented, oil was selling in the single digits, not the triple digits we see now. The cumulative effect of these policies has been to discourage U.S. investment and send U.S. companies outside the United States to produce new supplies.
As a result, U.S. production has declined so much that nearly 60 percent of daily consumption comes from foreign sources.
The problem of access can be solved in this country by the same government that has prohibited it. Congress could have chosen to lift some or all of the current restrictions on exportation and production of oil and gas. Congress could provide national policy to reverse the persistent decline of domestically secure natural resource development.
Later in the hearing, Senator Orrin Hatch walked Hofmeister through the Democrats' latest efforts to block energy independence:HATCH: I want to get into that. In other words, we're talking about Utah, Colorado and Wyoming. It's fair to say that they're not considered part of America's $22 billion of proven reserves.
HOFMEISTER: Not at all.
HATCH: No, but experts agree that there's between 800 billion to almost 2 trillion barrels of oil that could be recoverable there, and that's good oil, isn't it?
HOFMEISTER: That's correct.
HATCH: It could be recovered at somewhere between $30 and $40 a barrel?
HOFMEISTER: I think those costs are probably a bit dated now, based upon what we've seen in the inflation...
HATCH: Well, somewhere in that area.
HOFMEISTER: I don't know what the exact cost would be, but, you know, if there is more supply, I think inflation in the oil industry would be cracked. And we are facing severe inflation because of the limited amount of supply against the demand.
HATCH: I guess what I'm saying, though, is that if we started to develop the oil shale in those three states we could do it within this framework of over $100 a barrel and make a profit.
HOFMEISTER: I believe we could.
HATCH: And we could help our country alleviate its oil pressures.
HATCH: But they're stopping us from doing that right here, as we sit here. We just had a hearing last week where Democrats had stopped the ability to do that, in at least Colorado.
HOFMEISTER: Well, as I said in my opening statement, I think the public policy constraints on the supply side in this country are a disservice to the American consumer.
The committee's Democrats attempted no response. They know that they are largely responsible for the current high price of gasoline, and they want the price to rise even further. Consequently, they have no intention of permitting the development of domestic oil and gas reserves that would both increase this country's energy independence and give consumers a break from constantly increasing energy costs.
This is not *just* the Democrats who have been negligent on the issue - this has been a bipartisan panderfest for nearly a decade of 'screw them when they are down' and 'bitch when they are up'. Yep, that's America, all right. That legislation didn't get passed *just* by Democrats and there is more than enough blame to go around on this. So if you want the Clowns in Congress to be held accountable: don't re-elect them.
Especially if they have been in there for a decade. There really is no excuse at that length of time *not* to know how things work.